- Profits beat consensus
- Buyback bigger than thought
- Chief executive stepping down
Investors in Anglo-Pacific bank HSBC (HSBA) had plenty to cheer as the group posted first-quarter results above expectations and increased the size of its buyback.
The shares continued their recent rally, adding another 17p or 2.5% to take them to a new post-pandemic high of 685p.
BETTER RESULTS AND BUYBACK
For the three months to March, HSBC reported total revenue of $20.8 billion, 3% higher than the same period a year ago and ahead of the consensus, even after it sold its Canadian banking business and put its Argentinian unit up for sale.
Net interest income dipped by $300 million or 3% to $8.7 billion due to ‘deposit migration’, where customers move their cash into higher interest-bearing accounts, while non-interest income increased by $900 million thanks to $1.3 billion of trading gains, mostly in the global banking and markets division.
Operating costs of $8.2 billion were in line with estimates but provisions for bad loans were lower than forecast at $700 million, all of which fed through to pre-tax profits of $12.7 billion which were 5% ahead of expectations.
The bank also announced a $3 billion share buyback, 50% higher than analysts had forecast, along with a $0.21 per share special dividend.
SURPRISE DEPARTURE
There was one more surprise for investors, with the news chief executive Noel Quinn would be stepping down, which for a change hadn’t been telegraphed to the media.
Quinn took charge in 2019 and steered the bank through an incredibly dramatic period, including the Covid pandemic and an attempt by Chinese insurer Ping An (2318:HKG) to break up the bank.
A lifer who started at HSBC in 1987, Quinn had his pay doubled last year and wasn’t expected to step down but having been CEO there is no higher he can go and he is looking for a better work/life balance.
Since he took over, the shares have gained 35% which is better than the 10% rise in the FTSE 100 but a long way behind the 95% gain in the Stoxx 600 European banking index.
